[Congressional Record Volume 167, Number 87 (Wednesday, May 19, 2021)]
[Senate]
[Pages S3137-S3138]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 1618. Mr. TILLIS submitted an amendment intended to be proposed by
him to the bill S. 1260, to establish a new Directorate for Technology
and Innovation in the National Science Foundation, to establish a
regional technology hub program, to require a strategy and report on
economic security, science, research, innovation, manufacturing, and
job creation, to establish a critical supply chain resiliency program,
and for other purposes; which was ordered to lie on the table; as
follows:
At the appropriate place, insert the following:
SEC. ____. EMERGING AND FOUNDATIONAL NATIONAL SECURITY
TECHNOLOGIES.
(a) In General.--
(1) In general.--Subpart E of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
inserting after section 48C the following new section:
``SEC. 48D. CREDIT FOR NATIONAL SECURITY TECHNOLOGY.
``(a) General Rule.--For purposes of section 46, the
national security technology credit for any taxable year is
an amount equal to the applicable percentage of the basis of
qualified property placed in service by the taxpayer during
such taxable year.
``(b) Applicable Percentage.--For purposes of this section,
the applicable percentage with respect to any taxable year
is--
``(1) 30 percent in the case of qualified property placed
in service before January 1, 2028,
``(2) 20 percent in the case of qualified property placed
in service after December 31, 2027, and before January 1,
2029,
``(3) 10 percent in the case of qualified property placed
in service after December 31, 2028, and before January 1,
2031, and
``(4) zero in the case of qualified property placed in
service after December 31, 2030.
``(c) Qualified Property.--For purposes of this section--
``(1) In general.--The term `qualified property' means
property--
``(A) which is used in the United States,
``(B) substantially all of the use of which is to design or
manufacture qualified national security technology,
``(C) which is described in section 1221(a)(2), and
``(D) the original use of which commences with the
taxpayer.
``(2) Qualified national security technology.--The term
`qualified national security technology' means technology
which, as of the first year a credit under this section is
claimed by the taxpayer for the technology--
``(A) is described in section 721(a)(6)(A) of the Defense
Production Act of 1950 (50 U.S.C. 4565(a)(6)(A)), or
``(B) is included on the list promulgated by the White
House Office of Science and Technology Policy under
subsection (e).
``(d) Denial of Double Benefit.--A credit shall not be
allowed under this section for any expense for which a credit
is allowed under any other provision of this title.
``(e) Emerging and Foundational National Security
Technologies.--Not later than 6 months after the date of the
enactment of this section, the Secretary, in consultation
with the Director of the White House Office of Science and
Technology Policy, the Secretary of Defense, the Director of
National Intelligence, and the Secretary of Energy, shall
develop, promulgate, and update annually a list of emerging
and foundational technologies which are critical to national
security and the development and manufacture of which by
United States companies should be encouraged. Such list shall
be published annually and made publicly available, including
on the Internet.''.
(b) Conforming Amendments.--
(1) Section 46 of the Internal Revenue Code of 1986 is
amended--
(A) by striking ``and'' at the end of paragraph (5),
[[Page S3138]]
(B) by striking the period at the end of paragraph (6) and
inserting ``, and'', and
(C) by adding at the end the following new paragraph:
``(7) the national security technology credit.''.
(2) Section 49(a)(1)(C) of such Code is amended--
(A) by striking ``and'' at the end of clause (iv),
(B) by striking the period at the end of clause (v) and
inserting ``, and'', and
(C) by adding at the end the following new clause:
``(vi) the basis of any qualified property taken into
account under section 48D(c).''.
(3) The table of sections for subpart E of part IV of
subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 48C the
following new item:
``Sec. 48D. Credit for national security technology.''.
(c) Effective Date.--The amendments made by this section
shall apply to property placed in service after the first
publication of the list required under section 48D(e) of the
Internal Revenue Code of 1986, as added by this Act.
SEC. ____. EXCLUSION FOR GAIN FROM INVESTMENTS IN NATIONAL
SECURITY TECHNOLOGY.
(a) In General.--Part I of subchapter P of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 1202A. EXCLUSION FOR GAIN FROM QUALIFIED NATIONAL
SECURITY TECHNOLOGY STOCK.
``(a) Exclusion.--In the case of a taxpayer other than a
corporation, gross income shall not include any gain from the
sale or exchange of qualified national security technology
stock held for more than 5 years.
``(b) Qualified National Security Technology Stock.--For
purposes of this section--
``(1) In general.--Except as otherwise provided in this
section, the term `qualified national security technology
stock' means any stock in a C corporation which is originally
issued after the date of the enactment of the United States
Innovation and Competition Act if--
``(A) as of the date of issuance, such corporation is a
qualified corporation, and
``(B) except as provided in subsections (e) and (g), such
stock is acquired by the taxpayer at its original issue
(directly or through an underwriter)--
``(i) in exchange for money or other property (not
including stock), or
``(ii) as compensation for services provided to such
corporation (other than services performed as an underwriter
of such stock).
``(2) Active business requirement; etc.--Stock in a
corporation shall not be treated as qualified national
security technology stock unless, during substantially all of
the taxpayer's holding period for such stock, such
corporation meets the active business requirements of
subsection (d) and such corporation is a C corporation.
``(3) Certain purchases by corporation of its own stock.--
``(A) Redemptions from taxpayer or related person.--Stock
acquired by the taxpayer shall not be treated as qualified
national security technology stock if, at any time during the
4-year period beginning on the date 2 years before the
issuance of such stock, the corporation issuing such stock
purchased (directly or indirectly) any of its stock from the
taxpayer or from a person related (within the meaning of
section 267(b) or 707(b)) to the taxpayer.
``(B) Significant redemptions.--Stock issued by a
corporation shall not be treated as qualified national
security technology stock if, during the 2-year period
beginning on the date 1 year before the issuance of such
stock, such corporation made 1 or more purchases of its stock
with an aggregate value (as of the time of the respective
purchases) exceeding 5 percent of the aggregate value of all
of its stock as of the beginning of such 2-year period.
``(C) Treatment of certain transactions.--If any
transaction is treated under section 304(a) as a distribution
in redemption of the stock of any corporation, for purposes
of subparagraphs (A) and (B), such corporation shall be
treated as purchasing an amount of its stock equal to the
amount treated as such a distribution under section 304(a).
``(c) Qualified Corporation.--For purposes of this
section--
``(1) In general.--The term `qualified corporation' means
any domestic corporation which is a C corporation if
substantially all of the activities of such corporation are
to design or manufacture qualified national security
technology (as defined in section 48D(c)(2)).
``(2) Aggregation rules.--
``(A) In general.--All corporations which are members of
the same parent-subsidiary controlled group shall be treated
as 1 corporation for purposes of this subsection.
``(B) Parent-subsidiary controlled group.--For purposes of
subparagraph (A), the term `parent-subsidiary controlled
group' means any controlled group of corporations as defined
in section 1563(a)(1), except that--
``(i) `more than 50 percent' shall be substituted for `at
least 80 percent' each place it appears in section
1563(a)(1), and
``(ii) section 1563(a)(4) shall not apply.
``(d) Active Business Requirement.--
``(1) In general.--For purposes of subsection (b)(2), the
requirements of this subsection are met by a corporation for
any period if during such period--
``(A) at least 80 percent (by value) of the assets of such
corporation are used by such corporation in the active
conduct of 1 or more qualified trades or businesses involving
the design or manufacture of qualified national security
technology (as defined in section 48D(c)(2)), and
``(B) such corporation is an eligible corporation.
``(2) Special rule for certain activities.--For purposes of
paragraph (1), if, in connection with any future qualified
trade or business, a corporation is engaged in--
``(A) start-up activities described in section
195(c)(1)(A),
``(B) activities resulting in the payment or incurring of
expenditures which may be treated as research and
experimental expenditures under section 174, or
``(C) activities with respect to in-house research expenses
described in section 41(b)(4),
assets used in such activities shall be treated as used in
the active conduct of a qualified trade or business. Any
determination under this paragraph shall be made without
regard to whether a corporation has any gross income from
such activities at the time of the determination.
``(3) Qualified trade or business.--For purposes of this
subsection, the term `qualified trade or business' means any
trade or business other than any banking, insurance,
financing, leasing, investing, or similar business.
``(4) Eligible corporation.--For purposes of this
subsection, the term `eligible corporation' means any
domestic corporation.
``(5) Stock in other corporations.--
``(A) Look-thru in case of subsidiaries.--For purposes of
this subsection, stock and debt in any subsidiary corporation
shall be disregarded and the parent corporation shall be
deemed to own its ratable share of the subsidiary's assets,
and to conduct its ratable share of the subsidiary's
activities.
``(B) Portfolio stock or securities.--A corporation shall
be treated as failing to meet the requirements of paragraph
(1) for any period during which more than 10 percent of the
value of its assets (in excess of liabilities) consists of
stock or securities in other corporations which are not
subsidiaries of such corporation (other than assets described
in paragraph (6)).
``(C) Subsidiary.--For purposes of this paragraph, a
corporation shall be considered a subsidiary if the parent
owns more than 50 percent of the combined voting power of all
classes of stock entitled to vote, or more than 50 percent in
value of all outstanding stock, of such corporation.
``(6) Working capital.--For purposes of paragraph (1)(A),
any assets which--
``(A) are held as a part of the reasonably required working
capital needs of a qualified trade or business of the
corporation, or
``(B) are held for investment and are reasonably expected
to be used within 2 years to finance research and
experimentation in a qualified trade or business or increases
in working capital needs of a qualified trade or business,
shall be treated as used in the active conduct of a qualified
trade or business. For periods after the corporation has been
in existence for at least 2 years, in no event may more than
50 percent of the assets of the corporation qualify as used
in the active conduct of a qualified trade or business by
reason of this paragraph.
``(7) Maximum real estate holdings.--A corporation shall
not be treated as meeting the requirements of paragraph (1)
for any period during which more than 10 percent of the total
value of its assets consists of real property which is not
used in the active conduct of a qualified trade or business.
For purposes of the preceding sentence, the ownership of,
dealing in, or renting of real property shall not be treated
as the active conduct of a qualified trade or business.
``(8) Computer software royalties.--For purposes of
paragraph (1), rights to computer software which produces
active business computer software royalties (within the
meaning of section 543(d)(1)) shall be treated as an asset
used in the active conduct of a trade or business.
``(e) Certain Rules Made Applicable.--Rules similar to the
rules of subsections (f), (g), (h), (i), and (j) of section
1202 shall apply for purposes of this section.
``(f) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out the purposes
of this section, including regulations to prevent the
avoidance of the purposes of this section.''.
(b) Clerical Amendment.--The table of sections for part I
of subchapter P of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 1202A. Exclusion for gain from qualified national security
technology stock.''.
(c) Effective Date.--The amendments made by this section
shall apply to stock acquired after the date of the enactment
of this Act.
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